tv Nightly Business Report PBS February 4, 2015 1:00am-1:31am PST
report" with tyler mathisen and sue herera. blowout quarters. disney's earnings much better than expected but after a 30% run in the shares over the past year is this stock still a buy? market gusher. stocks are off to the races for the month of february. with the dow jones industrial average gaining 305 points in today's session. debt showdown. greek financer issue? mountain of debt. all that and more for tonight on "nightly business report," tuesday, february 3rd. investors must have awakened yesterday on groundhog's day and
failed to see january shadows. for the second day running, a major spring-like move higher than the dow jones industrial average. meanwhile and contributing to stock's gains, oil prices extended their rally, up about 7%. more on that in a moment. but first, disney. the house of the mouse which has seen its shares soar more than 30% over the past year out with earnings late today and they were anything but mini. company earned $1.27 a share, 20 cents better than wall street expected. revenue of 9% to more than $13 billion and as a result shares popped. after hours, and that was on top of a more than 2% gain in the regular session. julia boorstin spoke with ceo bob iger and has one big takeaway on disney's results. >> reporter: the key takeaway from disney's earnings is that iger's strategy is working.
all the company's divisions showing growth. >> great great quarter for the company across the board. clearly, i think it is a great testament to focus on franchises and our great brands. parks and resorts, obviously, benefit from that but operational excellence and clear demand around the holiday period. just about any way you look at it the company had a great quarter and i think, again, it a lot about the properties the assets that this company now has. >> reporter: iger sounds confident that this kind of across the board will continue with the disney franchises as well as other factors. bullish consumer confidence and said measles had no impact on attendance at disneyland and in fact attendance and reservations are up at the parks so far this quarter. as for espn a huge growth driver for disney iver said he's not concerned about core cutting. for "nightly business report,"
i'm julia boorstin in los angeles. bill smid is a long time shareholder of disney and joining us now to give his outlook for the company. he's ceo and chief investment company of smid capital management. welcome. it's a pleasure to have bill. >> thanks for having me. >> you've held disney for some time now, 7.5 years. would you still purchase more or do you think given the run-up it's had it's pretty fairly valued here? >> well it is fairly valued but between the comments of mr. iger who's done a fantastic job and then being reminded of saving mr. banks, the movie a year ago, they're constantly making investments in either creation of or buying new brands that they can manage and leverage better than other people can. so now, star wars going to come to the party. marvel has been a fantastic addition so yeah. the answer is for a long
duration investor like us ten years from now, this will be worth a lot more than it is today and it's worth sitting through the ups and downs of lives and bulls and bears and market to get to that. for an investor that's never owned the shares we're very comfortable buying it for them through capital appreciation strategy. and we wouldn't up our position right now because getting a lot of popularity the last 12 months. >> one issue i think many media companies like disney are concerned about is the amount of rights fees they have to pay for some sports programming. in the case of disney and espn it would be the national football league the college football championship and other things. are you concerned about that impacting their ability to make a nice margin? >> well it's a great question. right now, there's a lot of single males between 20 and 35
and within five to ten years, there won't be there will probably be 65% fewer of those same people. and what they'll do is they'll go from being primarily a customer of disney through espn to being married, having two children and being primarily a customer of the wholesome family entertainment. >> i was going to ask you what happened to 65% of guys. whew. >> that's what happens, is you get married and you basically move through different sectors of the disney corporation. we like to say they're the most successful babysitting organization in the world. obviously, they babysit children but they babysit adult males between the ages of 18 and 100 through espn and the sports program. >> well what you have to do is if you're that 65% is marry a woman who loves disney and
football. then you're all right. >> the super bowl that we saw a lot of women that do love football. >> and i'm one of them. bill how much of your confidence in disney stems from bob iger being with the company? do you think the succession plan that's been put in place will allow the company to continue to perform on so many different of their platforms? >> that's a great question because we all remember that in 1984 that michael eisner became the ceo with a second lieutenant by the name of frank wells and did a great job of moving disney forward. unfortunately, frank walls died in 1984 in a plane crash and michael eisner was lost without his good cop there, right? what happened in the next ten years was a lot of talented people like meg whitman and steve bulenbock and were set adrift from disney.
i think bob iger is a great cultivator of people behind him and a very humble guy in that respect. so yeah you know, warren buffett and peter lynch like to say to own a business even a 2-year-old could run. the beauty of this business is it's a business that has a lot of his own legs but he's been an outstanding ceo. he'll be hard to replace. >> i'm sure he will be. bill thank you very much. bill smid with smid capital management. ty? back to the stock rally. rise with a number of factors added to investor opttism. oil prices up. january car sales better than expected and greece revealed to end standoff with creditors out of the euro zone. the close of the day, dow up 305 points to finish at 17,666. the sixth straight session of triple digit moves one way or the other. nasdaq up 51. s&p 500 higher by 29.
oil prices climb to their highs of the year. west texas crude spiking 7% to settle at $63.05 a barrel, increase of 19% in three days, a move that, by the way, has lifted energy shares very sharply. brent crude also rally. two federal reserve officials out today with two different take ons when to raise interest rates. first, there's the president of the minneapolis federal reserve, the ronya who said should keep interest rates near zero this year raising rates too soon he said could slow job growth. on the other side is james buller the president of the st. louis fed who said he'd like to see the federal reserve drop the word patient from policy statement to give the central bank more flexibility on when to start hiking another reason for today's rally on wall street was news the auto industry's winning streak continued into 2015. january auto sales up 15% compared with just last year. the annualized rate of sale now
more than 16 million vooeks the highest in nine years according to auto data. general motors saw sales jump 18%, ford up 15%. below some estimates. chrysler sales up 14%. shares of all three companies higher by more than two percent with chrysler up the most as you see there. philip lebeau with more on what drove sales last month. >> reporter: a big january for the auto industry driven largely by demand for big vehicles. across the board, almost all of the auto makers reported an increase in january sales of between 11% and 18% and for the most part those sales were better than many were expecting. subaru mercedes nissan hyundai and jooep all reported their best january sales ever. and speaking of jeep it continued to be a roll. january sales up for that brand 23%. the best january ever. it was driven by cherokee sales
up 44%. and for the big threes all about the demand for pickup trucks and suvs. take general motors. its truck sales last month jumped 42% and the average transaction price, the estimate is that it's just over $36,000 in increased eweyear over year of 7.7%. bottom line cheap gas and high consumer confidence. that's what is fueling demand for new vehicles right now and especially demand for large suvs and pickup trucks. philip lebeau "nightly business report," chicago. and now to greece where that country unveiled a new plan to deal with its debt. but the showdown with its international lenders shifts into high gear tomorrow. the greek finance minister will meet with the head of the european central bank mario draghi and he's expected to ask that greece be given easier repayment terms on its loans. more time as well and lower interest rates. michelle caruso-cabrera reports.
>> reporter: greece's finance minister ya niece, has been on a tour of capitals meeting many finance ministers innountries that lent greece nearly 200 billion euros. been to france the united kingdom, today, italy in what's been his signature style. no tie, a blue open collared shirt and often a leather jacket when he's outside. tomorrow he heads to the country that has loaned greece the most money. germany. the relationship between the two countries extremely tense as a result of the bailout. yanis is going to meet with the head of the european central bank mario draghi. greece owes additional 23 million euros and expected to ask for easier repayment terms and much lower interest rates. close to zero is what he's hoping. the ecb wouldn't comment on the report of the expected proposal saying they can't comment on what hasn't been proposed to them yet. however, they did point me to an interview that a member of the
ecb gave in italy last week. that interview, he said there's no extension or maturities and greece must continue to abide by rules. the markets move sharply higher yesterday and today when greece announced it was backing down on another demand. the other governments forgive their debt. investors will be watching to see how this meeting with the european central bank goes and if greece backs down yet again, it could lead to another relief rally in the market. for "nightly business report," michelle caruso-cabrera. still ahead there may be big changes coming to the way the internet is run, but should it be considered a utility and regulated like one?
it's official. the justice department has reached a record settlement with standard and poors. agreed to settle to inflated ratings on more goods securities in the lead-up to the financial crisis. turned deal the fine will be distributed among the justice department, 19 states, and washington, d.c. >> the company declined to downgrade underperforming assets because it was worried that doing so would hurt the company's business. now, while the strategy may have helped s&p avoid disappointing clients, it did major harm major harm to the larger economy contributing to the worst financial crisis sense the great depression. >> as part of that agreement, s&p did not admit wrongdoing and
we told you the justice department is in talks with moody's over similar conduct. the net neutrality debate back in the spotlight as zek is set to unveil a proposal to change the way it oversees high speed internet service. two guests tonight with opposing views on this very important topic. todd o'boyle with common cause and he favors regulating the internet as a utility while scott cle land a broadband consultant and president of his own firm disagrees saying this move could in fact break the internet. we should point out before we begin that cnbc that produces "nightly business report" is owned by the broadband provider comcast. let me begin with you, mr. o'boyle. this is a very nuanced topic. it can be eye glazingly complex, frankly. but at its heart, it goes to the question of whether broadband
providers, as i understand it, ought to be able to charge different prices for differe speeds. why shouldn't a broadband provider be able to charge a, quote, data hog for using so bandwidth? >> broadband providers should be in the business of delivering to consumers the content that they're already paying for. they're paying subscribers and should be able to get to the web sites and services of their choice. that's the core of common carrier or so-called net neutrality protections and it's actually core to the way the internet functions. this has nothing to do with the so-called utility star regulation and everything to do with consumer protection. >> and scott, i know you disagree with some of that. take the other side. >> well net neutrality is something people enjoy today. businesses do not have an interest in blocking or throttling. what the problem is applying utility regulation to something that's not a utility. this is a utility is like
electricity, gas, or water. and broadband can be delivered electrically over water, not a utility that needs regulation. >> i'm not sure mr. o'boyle would say this but i've seen people on the other side of the debate from you say that the ability of the large carriers to block small and entrepreneurial carriers or disadvantage them with speeds is the reason we need this equal treatment for all. why isn't that a strong argument here? or is it? >> the reason it isn't is because we have over a thousand broadband providers over the last ten years with quintillions of transmissions and transactions. less than a handful of identified problems. this is li taking a beach and
we found two grains of sand that are a problem and need to hypo hyperregulate the whole beach. they're willing to abide by the sec rules. utility regulation would provide the most obsolete regulati modern part of the economy. it would slow down to government speed. it's unnecessary and unwarranted. >> would it do that todd? would it basically slow everything down to government speed, which in some cases is extremely slow is it overkill? >> absolutely not. in fact strong net neutrality encourage innovation and encourage investment. they ensure innovators with sorts of regulatory certainty they need to make multimillion dollar or billion dollar bets. that's why we know so many small businesses start-ups, dot coms are eager for full title
reclassification reel the neutrality strong neutrality. that's one thing i have to take exception. we do know internet service providers are interfering with their consumers. the consumer's access online we saw comcast interfered with netflix the month after the old net neutrality were thrown out. >> i want to get more cleland's response but your reaction to what i thought i heard scott say is that the broadband providers, quote, favor net neutrality don't want to throttle don't want to do anything like that. is that how you see it how do you react to that? >> devil is in the details of course. they say they support net neutrality in the same way we all support motherhood and apple pie but what matters is the rules are written in a way that's enforceable and when the court recently or last year threw out the old rules, they did so because they were written in a way that was effectively unenforceable. the reason these providers like
the idea just not the implementations because if it's written the wrong way, it will get turn out. >> scotty final thought. >> title two is the most onerous regulation available to regulate any industry. this is the most modern industry. everybody's gone from smartphones. no one had one seven years. over 200 million people have them today. this is an industry that's not broken and the sec should be careful not to break it with the most obsolete available. >> thank you, common cause. cleland with precursor. shares of office depot and staples surge on merger reports and that's where we begin tonight's market focus. the office suppliers in advance merger talks according to the reports. together the firms have about 4,000 stores and about $35 million in annual sales. this comes as activist star board value publicly called on both chains to merge.
shares of office depot surge to $9.28 and staples to $19.01. macy macy's out with strong guidance. hiked the 2014 outlook with plans for the beauty products maker, blue mercury with more than $200 million. shares popped initially after the close and then fell back a little bit. before the bell the stock up about 3% to $66.07. ups also out with a down bate forecast. the package delivery company provided disappointing earnings forecast for 2015 because of a drop in fourth quarter profits caused by extra expenses during the holiday season. the company said it will control the cost and raise prices this year. still, shares finished higher to $157. etna matched. hiked the full profit outlook but still below the street's forecast as it's seen up 2% to
$94.18. investors were pleased with the new york times quarterly. the gray lady beat on the top and bottom lines and digital growth offset continued weakness in print. overall, ad revenue for the year fell by the smallest amount, 7/10 of 1%. $13.73. gilead with high priced hepatitis c treatment. the company initiated quarterly payout of 43 cents a share with yield of 1.5% and approved $15 billion buyback program. shares fell before the close. stock was up 1% to $107.18. let's talk chipotle. revenue higher. not as much as wall street had hoped. the burrito maker's earnings did meet estimates as the chain raised prices by average of 6%
in the third quarter because of higher ingredient costs. shares tumbled as you see vividly there. shares up about 2% during the regular trading session to finish at $726.63. this is a name pretty much everybody knows and it's a business that has fallen on hard times. radio shack. the new york stock exchange stock and taken action to delist the share of the troubled dealer. a number of problems got the company to this point but as morgan brennan reports, radio shack's pain could be a gain for others. >> reporter: more pain for raiddio shack. once considered the go-to shop, has failed to adapt to consumer habits. as competition cut into sales. the 94-year-old company has been hem morageing money. and the last week received a second notice of default on
credit agreement. the bankruptcy is widely expected to be filed any day now. radio shack's largest investor hedge fund general, could be in a court supervised auction of the assets that include 4300 stores like this one that are operated by 27,000 employees. as many as of of the locations could close. and potential buyers have already reportedly begun to surface. including one of the very companies that's taken market share from the retailer. amazon. analysts say such a move could give amazon a brick and mortar presence to peddle mobile devices but the bigger benefit may be factory delivery of packages. >> amazon these physical presence could help with same-day delivery pushing further and further to local commerce. >> sprint may also be interested. the bierless carrier been reportedly holding talks about stores and believe more bidders
could still emerge. for "nightly business report," i'm morgan brennan in ft. lee new jersey: coming up why low gas prices help main street businesses in more ways than on and finally tonight, low gasoline prices are helping put extra cash in the pockets of consumers. some choose to save it others spend it and it's the extra spending that is helping some main street businesses in more ways than one. kate rogers reports.
>> i became a candy maker. >> reporter: for joseph dutrik low gases mean boosted bottom line. the reno nevada based candy manufacturer and retailer said in the past few months online sales have increased by 15% as the price at the pump continues to fall. >> people have more money in their pocket to make those discretionary purchases like candy. >> reporter: quester research reports more than 75% of small and medium sized businesses have been positively impacted by falling crude with 20% saving the cash 19% investing in employees, and another 19% just operating as usual. james diado is sitting tight. burned 10,000 of gallons at excavation contracting company in search court in tempe, arizona. low gas prices help now but what
matters more is whether this will stay. >> we are benefitting now and it's just catching up from the past several years. >> reporter: but dutra is thinking ahead, projecting more prices if crude continues to slide. for "nightly business report," i'm kate rogers. and that's "nightly business report" for tonight. i'm sue herera thanks for watching. >> i'm tyler mathisen. thanks from me as well. have a great evening, everybody. we'll see you back here tomo
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